Murdoch faces Titanic hole at News Corp as top man Chernin goes

Big loss: Peter Chernin, pictured left with film director Danny Boyle at this week’s Oscars, backed box-office hits such as Titanic and Slumdog Millionaire for Murdoch’s News Corp

For those who have followed the twists and turns of Rupert Murdoch's remarkable career over the last 40 years the departure of another right-hand man comes as no surprise. Peter Chernin, News Corporation's president and chief operating officer, is taking a path well travelled by a succession of the media mogul's previous aides.

Regardless of their skills or their loyalty, those who get closest to Murdoch eventually get burned by the man who was memorably nicknamed the Sun King by Andrew Neil. The names of the discarded right-hand men echo down the years - Rohan Rivett, Larry Lamb, Richard Searby, Bruce Matthews, Sam Chisholm, Barry Diller and even his eldest son, Lachlan - along with countless editors, not to mention a couple of wives.

Neil spoke from experience. As editor of The Sunday Times during the move to Wapping, it was Neil who shouldered the responsibility for articulating in public the merits of locking out the print unions. Meanwhile, he ensured The Sunday Times maintained its pre-eminence and then went on to play a key role in the launch of Sky satellite TV.

Yet Murdoch became increasingly irritated by Neil because of the very quality that Murdoch originally admired in him - his strength of character. That quality has been the hallmark of all of his favoured and rejected executives, and Chernin is a classic example. Here is a man who knows his own mind and who has made a huge personal success of running News Corp's film and TV businesses. He combines both financial acumen and creative flair, ensuring that 20th Century Fox has remained top of the Hollywood tree.

He not only decides what films should and should not be made. He is renowned for making notes on scripts, managing at the micro as well as macro level.

One incident illustrates his worth. In 1997, he oversaw a movie project that looked to be out of control. It was running way over budget and plenty of wiseacres warned that it was doomed to the kind of disaster it portrayed. But Chernin kept the faith and Titanic went on to become the highest-earning film in history.

Consider also his wisdom in deciding that Fox Searchlight should share distribution of Slumdog Millionaire, the small-budget film that has just picked up eight Oscars and already taken £110.4 million at the box office.

Chernin has been so good at the job that Murdoch has been able to let him get on with things in the knowledge that his division will produce bumper profits. His financial achievements even prompted one unnamed shareholder, quoted in an Economist profile a year ago, to say: "You sometimes wonder who is the organisational genius: is it Rupert, or is it Peter?"

I doubt Murdoch read this - and I can't imagine an executive being silly enough to point it out - but similar views must have filtered through to him. He is aware that Chernin is highly regarded by investors, and his loss will hit News Corp at a time when he can least afford it. Earlier this month, when announcing that his company had lost £4.37 billion in the final three months of 2008, Murdoch described the economic crisis as the worst in News Corp's 50-year history.

The heavy loss reflected the company's decision to write down £5.8 billion of its assets, which included those of Dow Jones, publisher of the Wall Street Journal it bought in 2007 for £2.5 billion. It was noticeable that operating revenue for the quarter also fell dramatically, down 42% on the same period the year before. The result was a fall in News Corp's stock price, which is now almost 70% below its 52-week high, an even worse drop than that suffered by rivals such as Time Warner and Disney.

Chernin's resignation will compound News Corp's problems, and Murdoch's decision to step into his shoes for the time being will hardly allay fears among investors about the future. Murdoch will celebrate his 78th birthday in a couple of weeks' time and, with Chernin moving aside, there will be renewed speculation about who will succeed the Sun King and when.

It is assumed that his 36-year-old youngest son, James, is being lined up for the big job. But, after a four-year stint overseeing BSkyB, he has spent a mere 13 months in charge of News Corp's European and Asian interests.

He has yet to illustrate that he has anything like the skills of either his father or Chernin. Indeed, his first major decision at News International, to cut 65 jobs across the four Wapping-based newspapers, was surprisingly timid given both the company's current state and the staffing levels at rival titles.

A forthcoming interview with James - to be published in the March issue of Intelligent Life magazine - depicts him as tentative and bland, mouthing "a kind of corporate stream-of-consciousness" in which he describes newspapers as "products", readers as "customers" and The Sunday Times as a "multi-format proposition".

I have never heard his father come close to using such terms. Though it is far from proof that James is not up to the job, it indicates that he is very different from Rupert and also from Chernin.

News Corp is hardly on its uppers, of course. Murdoch has survived crises in the past, not least during the 1990 recession. But the old fox will have his work cut out to maintain the success of Fox films and TV. It may well prove to be a Titanic struggle.